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Bank of England Building Payments Network to Support a Potential Digital Pound

CoinDesk has learned the Bank of England's new settlement system is being built so it can be forwards compatible with a digital currency.

Jul 30, 2020 at 2:13 p.m. UTC
Updated Sep 14, 2021 at 9:38 a.m. UTC

The Bank of England's upcoming settlement service is being designed to support a possible central bank digital currency (CBDC).

  • CoinDesk has learned the BoE will ensure its redesigned real-time gross settlement service (RTGS), the payments network used by U.K. financial institutions, can be forwards compatible with CBDCs, such as a digital pound.
  • The new settlements system is being designed that the bank could "bolt on" a facility for digital currency transactions, should it decide to support a CBDC.
  • Modules for other future capabilities, as well as the digital pound, are also being considered for the upcoming settlement system.
  • RTGS is a key component in the U.K.'s financial infrastructure – it's where institutions hold their sterling accounts and acts as the main channel for the BoE to inject liquidity into the economy.
  • On average, RTGS settles more than £685 billion ($900 billion) worth of transactions each working day.
  • The BoE announced Thursday it had chosen Irish tech consultancy firm Accenture for a £150 million ($195 million) contract to redesign the payments network.
  • In a statement, Accenture said the new RTGS system would adapt to the changing financial system by providing access to more firms, as well as greater interoperability and functionality.
  • The new RTGS system is expected to go live in 2022.
  • Earlier this month, BoE Governor Andrew Bailey said the 400-year-old central bank was seriously considering whether to launch a CBDC.
  • Officials have previously said the BoE was open to the idea of private companies having a greater role in the issuance of a digital pound, insofar that they stick to the bank's design and policy principles.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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